The PBGC will take over the defined benefit pension fund of Constar Inc., the agency announced Wednesday.
The Trevose, Pa.-based plastic container manufacturer is selling most of its assets in bankruptcy proceedings. Constar has a stalking-horse asset purchase agreement with Amcor Rigid Plastics USA, which is not assuming responsibility for the pension fund. Stalking-horse bids allow a distressed company to choose the first bidder to avoid low bids at auction.
Constar and some subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., on Dec. 19 “in order to complete the transaction,” according to a Constar news release issued Dec. 19. The transaction with Amcor Rigid Plastics USA, Ann Arbor, Mich., will allow Constar to continue operations “and expand our offering and capabilities,” Constar interim CEO Louis Imbrogno Jr. said in the release.
The Pension Benefit Guaranty Corp. will take over the Constar Inc. Pension Plan, which it estimates is 66% funded, with $89.6 million in assets and $135 million in liabilities. The PBGC will cover $44.7 million of the $45.4 million shortfall.
PBGC spokesman Marc Hopkins said the agency, which chairs the Constar unsecured creditors committee, will assert claims for pension underfunding during the bankruptcy proceedings, among other claims.
Constar is selling most of its assets in two separate auctions, one for its domestic assets and another for assets or stock of affiliates in the U.K. and the Netherlands, on Thursday. A hearing on the sale to Amcor is scheduled for Feb. 10.
Calls to Constar’s corporate office in Trevose and executive office in Troy, Mich., were not returned.